What I don’t get is even in the absence of capitalization wouldn’t the default interpretation be whatever the prevailing reasonable meaning would be?
This is because, unlike with punctuation, capitalization was not (and still is not) consistent across legal documents. Some people/firms use all caps for defined terms; others standard capitalization, and many don't capitalize at all on the grounds that a a defined term is not a proper noun unless it is a person, place, or thing.
What was relevant was that the author failed to properly disclosed a "connected person" as defined in the legal agreement. The law he was referencing would have done nothing to address/correct his failure, regardless of the capitalization used.
“In legalese, there is a massive difference between proper and improper nouns.”
Do you understand or would you like more help?